Canada: Recommended Changes To Ontario's Construction Lien Act: Work In Progress

On September 26, 2016, the Ministry of the Attorney General (MAG) released its report: "Striking the Balance: Expert Review of Ontario's Construction Lien Act" (the Report). The Report's review process, which included consultation with over 60 stakeholder groups, began in February 2015 arising out of the previously proposed prompt payment legislation (Bill 69), and involved a review of the effectiveness of the Construction Lien Act (CLA), specifically assessing: (1) whether the statute's policy objectives, drafted in 1983, required revitalization and modernization; (2) the effectiveness of the current payment structures under the CLA; and (3) the adequacy of the existing dispute resolution process under the CLA.

The Report strongly supports maintaining the lien/holdback regime of the CLA as a protectionist measure for construction industry participants. Significantly, the Report also recommends the establishment of a new statute to address matters beyond construction liens and trusts, with the suggested title the "Construction Act: An Act respecting Security of Payment and Efficient Dispute Resolution in the Construction Industry." Of the 100 recommendations identified in the Report (conveniently collected and summarized in Chapter 13), highlights of the Report include:

Preservation, Perfection and Expiry of Liens

  • The time period for the preservation of a lien under section 31 of the CLA would be extended from 45 to 60 calendar days.
  • Termination of a contract would be added as a trigger for the expiry of lien rights and a mandatory form of Notice of Termination or Abandonment would be required to be published to trigger the commencement of the time limit for the preservation of liens under the CLA.
  • The time period for the perfection of a lien would be extended from 45 to 90 days from the last day upon which the lien could have been preserved (i.e., 90 days after the 60th day).
  • The common elements in condominium buildings would be required to have a single PIN to which liens could attach, and the interests of all unit owners would be subject to this lien.
  • Condominium unit owners would be able to post security proportionate to their unit share of a lien, to have the lien vacated.
  • For improvements to leasehold properties, where a landlord funds the improvement though a cash allowance or otherwise requires the improvement, liens would attach to the interests of both the tenant named in the lease and the landlord. However, a landlord's liability in those circumstances would be limited to an amount equal to any deficiency in the holdback (similar to the treatment of mortgagees under the CLA).

Holdback and Substantial Performance

  • The release of holdback under the CLA would become mandatory, subject to any preserved liens and an owner's right of set-off under the CLA, but specifically excluding an owner's right of set-off for debts, claims and damages in relation to other contracts (section 17(3) of the CLA currently permits set-off for debts unrelated to the improvement).
  • If an owner intends to claim set-off in relation to the contract that is the subject of a lien, it would be required to publish a notice of non-payment/ set-off.
  • Partial release of holdback would be allowed on either a phased or annual basis if provided for in the construction contract.

What is Lienable?

  • The definition of "improvement" would be amended to include any capital repair to land and any IT services, materials, equipment and software.

Summary Procedure for Lien Actions

  • Construction lien actions would be case managed in all regions of Ontario.
  • Leave of the court would not be required to bring interlocutory motions within a lien action, to conduct oral examinations for discovery and examinations of documents, or to commence third party claims.
  • Joinder of lien claims and trust claims would be allowed.
  • Lien claims under $25,000.00, would be referred to the Small Claims Court (although certain relief would necessarily remain beyond the jurisdiction of that court, such as declaratory relief) and lien claims between $25,000.00 and $100,000.00 would be dealt with by a simplified procedure with limited examinations for discovery and a summary trial procedure.

Construction Trusts

  • A trustee under the CLA would be required to follow specific statutory requirements in relation to trust fund bookkeeping similar to that applied in the New York Lien Law.

Prompt Payment

  • The Report recommends the creation of a prompt payment regime to be applied to both the public and private sectors that would include, inter alia:

    • The requirement that payments be made, as between an owner and contractor, within 28 days of the owner's receipt of the contractor's invoice, and as between a contractor and a subcontractor, within a further 7 days from the contractor's receipt of payment from the owner, subject to any agreement the parties have made to the contrary;
    • Mandatory non-waivable interest for overdue payments at either the Courts of Justice Act or contract rates.


  • Adjudication would be implemented as a targeted interim binding dispute resolution method available as a right to parties to construction contracts and subcontracts in both the public and private sectors.
  • The parties would have two (2) business days after delivering a Notice of Adjudication to agree on an adjudicator, failing which either party could request that an adjudicator be appointed within five (5) business days.
  • Within thirty (30) calendar days, the adjudicator would be required to set and execute his/her process for the adjudication, including addressing evidence, experts, submissions, inspection of the work, and directions, with reasons to be provided in a written decision.
  • The decision of the adjudicator would be binding on an interim basis, enforced if necessary, through an Application to the Ontario Superior Court of Justice.

Other Technical Amendments

  • The amount of security to be posted to vacate a lien under the CLA would be increased to include the total of the full amount claimed as owing in the claim for lien and the lesser of 25% or $250,000.00 of the amount of the lien, as security for costs.
  • When a mortgagee makes a loan for the purpose of financing both land acquisition and the construction of an improvement, the mortgagee would be required to identify in the mortgage documents the amount intended for the acquisition of land and the amount intended for the improvement.
  • All public sector projects would be required to be surety bonded (regardless of size, since no monetary threshold for contracts has been proposed).

If adopted, the recommendations outlined in the Report will have significant and far reaching ramifications for all participants in the construction industry. While some of the recommended changes aim to create a more efficient and less costly dispute resolution procedure for construction project disputes, through the proposed adjudication process, jurisdiction of the Small Claims Court for minor disputes, and application of the Simplified Rules for disputes valued at less than $100,000, other recommended changes could have the effect of delaying and increasing the costs of larger lien claims as a result of the enhanced rights of discovery, the unfettered right to bring interlocutory motions, the joinder of trust claims with lien claims, the new requirements for the handling of trust funds, the increased amount required to post for security for costs when vacating liens, and the mandatory requirement to obtain surety bonds on public projects. In addition, these recommended changes to the CLA could create greater and/or new legal liability for landlords and new obligations on mortgagees providing purchase and construction loans, and the longer preservation deadline will also extend the period before which statutory holdback on a project is released.

The Government is currently undertaking meetings with some stakeholder groups, seeking feedback on the recommendations in the Report, but is not expected to pursue other formal consultation before determining the steps it will take with the Report's recommendations.

A full version of the Report can be viewed here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Fogler, Rubinoff LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Fogler, Rubinoff LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions